Two Game Technology Startups Join Forces

Kontagent and Medium Entertainment, two closely held companies that create tools for mobile game makers to improve their products, are merging businesses in an effort to offer a fuller set of products to customers.

In an announcement Wednesday, the two companies said they will merge into a new firm initially being referred to as “Kontagent-PlayHaven,” after their namesake products. The latter’s current head, Andy Yang, will be the combined company’s CEO. Kontagent’s chief executive, Josh Williams, will become the head of technology and serve as chairman of the board of directors. The companies plan to come up with a new name.

No cash is changing hands, the two companies said.

Kontagent’s analytics technology is used to help companies track how customers use their apps, while PlayHaven offers ways for companies to send messages to and transact with those customers. Together, the two companies said their technology is being used in 22,000 mobile apps, reaching over 400 million monthly active users.

“As a combined entity we’ll have a product no one else can come close to,” Yang said in an interview.

The two companies began partnership talks this fall, initially as a discussion of a business relationship, the two company CEOs said. The two began talking because they shared many customers such as Glu Mobile, Big Fish Games and Electronic Arts, which were often asking how to combine their offerings. Eventually, the two agreed on a merger, for which each CEO will sit on the board, as well as a representative from each of their former boards, and an independent seat not yet announced.

The combined company will be headquartered in San Francisco and currently has 160 employees, though the pair admitted they aren’t sure what redundancies exist and what potential layoffs, if any, will need to happen.

“This is day one, the first day of getting married, and we’re living together now and seeing how it plays out,” Yang said, adding that he’s working on the combined company’s plan for the new year.

The combined company still isn’t profitable, the pair admitted, though they said revenue is growing rapidly. Williams said the two company’s combined revenue was in single-digit millions of dollars in 2011, and has grown 10-times over since then, without offering more details.

Yang said he expects to see further consolidation because competition within the analytics and app payments industries has become so crowded and cutthroat. Kontagent itself has also changed direction before, initially focusing on products for websites, such as games for Facebook, before switching to focus on mobile device apps. In the future, Yang said, he plans to direct resources towards offerings for wearable technology as well.

“The market today is immature,” he said, noting that no one company offers analytics, monetization and all the other products his new combined entity does. “We want to build a clear market leader.”